Hedge funds in gold futures market get crushed by ‘Big Boy’ ETFs

Bloomberg/Eddie van der Walt

photo of three poured gold bullion bars“There’s a big shift in the balance of power in the global gold market. A relentlessly expanding physical hoard of bullion stored in London and New York means exchange-traded funds have usurped managed money in the futures market as the key driver of the price of the shiny metal. For much of the grind higher that saw gold break above $1,800 per ounce for the first time in eight years last week, investors in the biggest futures market were reducing their positions. At the same time, ETFs were increasing their holdings to more than 3,000 tons – the highest total ever recorded.”

USAGOLD note:  Bloomberg’s Eddie van der Walt does a stellar job covering the gold market and he’s been on a roll of late. This article on ETFs replacing the futures market as the prime mover in the gold pricing mechanism is his most impressive to date.  As a matter of fact, we look at it as perhaps the most important gold article of the year – Bloomberg’s announcement to the world of a changing of the guard in the gold market. A good many of those “Big Boy” players in the ETFs, we would add, are hedge funds as well – in fact, some of the biggest names in the investment business like Ray Dalio, Stanley Druckenmiller, Paul Elliot Singer, Jeffrey Gundlach, David Einhorn, Paul Tudor Jones and Mark Mobius (to name a few). Most in that group have expressed a long term commitment to gold as a means of hedging over-stretched financial markets and the ongoing monetary policies of the world’s central banks.

Repost from 7-16-2020

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